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Nov. 21 — Cracks in party unity may be exposed if President-elect Donald Trump moves forward
with establishing an infrastructure bank or advocating for federal spending on mass
transit.

Details about the $1 trillion infrastructure plan Trump discussed on the campaign
trail are beginning to emerge. His transition team revealed the week of Nov. 14 that
an infrastructure bank could be wrapped into the plan, but they provided scant details
on how the bank would be organized or funded.

While congressional Republicans generally seem open to Trump’s developing proposal
to invest in the nation’s infrastructure over the next year, whether they are unified
in backing it could largely depend on the details of the infrastructure bank proposal.

Shuster Wary of Infrastructure Banks

One key Republican who has opposed the idea in the past is House Transportation and
Infrastructure Chairman Bill Shuster (R-Pa.), who is expected to remain the committee’s
top Republican in the next Congress. Shuster has previously said he worries an infrastructure
bank could become another Fannie Mae- or Freddie Mac-type lending institution.

That’s been Shuster’s position on past infrastructure bank proposals, but let’s see
what any new proposals look like, one committee aide told Bloomberg BNA.

The concept of an infrastructure bank isn’t new. It was pitched last year in the lead
up to the enactment of a five-year surface transportation law known as the FAST Act.
Rep. John Delaney (D-Md.) sponsored legislation that would impose an 8.75 percent
tax rate on offshore corporate earnings to create a $50 billion infrastructure fund.
He applauded news that Trump might add an infrastructure fund to his plan, saying
there was a big bipartisan coalition in Congress that would be willing to get behind
the idea.

The idea also has been backed by President Barack Obama, and was the linchpin of Democratic
presidential candidate Hillary Clinton’s $275 billion infrastructure proposal that
was previously criticized by Trump’s camp. That plan would have also been funded by
taxing offshore corporate earnings.

Prior to the election, Trump initially floated the idea of providing tax breaks to
private companies that invest in state and municipal projects.

Divergent Transit Positions

Transit funding could be another source of potential conflict between Trump and congressional
Republicans, particularly those in the House.

The Republican Party platform released in July contends the federal transit program
should be blocked from drawing funds from the Highway Trust Fund (HTF) because it
distorts the trust fund’s original purpose to support road projects. The position
is similar to that taken in legislation introduced by Reps. Thomas Massie (R-Ky.)
and Mark Sanford (R-S.C.) last year that would remove the federal transit program
from the Highway Trust Fund.

But Trump has said he plans to invest in public transit. In fact, American Public
Transportation Association Vice President of Policy Art Guzzetti said the group recently
met with Trump’s transition team to discuss the “mechanics”
of transit funding.

“It was very general, Guzzetti told Bloomberg BNA. “But it was a good meeting in the
sense that there was a connection on transit being part of a balanced plan going forward.”

He highlighted Trump’s history of making sure transit was included in his development
projects as indicative of the soon-to-be-president’s recognition of the need for transit
investments. Trump is from Manhattan, so he sees transit investments at work everyday,
Guzzetti said.

So how does that jibe with the Republican Party’s transit position?

“It clearly doesn’t match,”
Robert Puentes, president and CEO at the Eno Center for Transportation, said. “How
that plays out, I couldn’t even begin to speculate.”

Getting Matter of Fact on the Money

It might be hard to reconcile Trump’s emphasis on public-private partnerships with
a push to increase transit funding, Puentes said. Transit projects have a greater
potential for not generating revenue adequate to cover construction costs, and the
industry is moving away from availability payments—payments that states and localities
can make to investors regardless of the demand for the project—he said.

There is also the possibility that the tax credit portion of Trump’s proposal to use
infrastructure investments as a short-term job creator could strike conservatives
as too similar to the Obama administration’s argument for the 2009 stimulus, he said.

“I don’t know if folks will be kind of raising an eyebrow about that,” Puentes said.

Third-ranking Republican and Commerce Committee Chairman John Thune (R-S.D.) has suggested
including a big infrastructure bill within a larger tax overhaul—an idea that also
has been backed by House Speaker Paul Ryan (R-Wis.).

On the other side of the aisle, Ronald A. Klain, who oversaw implementation of the
2009 stimulus package as an Obama administration aide and was a Clinton campaign adviser,
told Democrats that they would be making a “mistake in policy and political judgment”
if they backed the tax cuts in Trump’s plan, equating it to massive corporate welfare
for contractors.

Without a clear funding mechanism, Trump’s infrastructure plan could add to the national
deficit, he said.

To contact the reporter on this story: Stephanie Beasley in Washington at
sbeasley@bna.com

To contact the editor responsible for this story:
Paul Hendrie at
phendrie@bna.com

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